The International Air Transport Association (IATA) is optimistic that a basic agreement on global market-based measures (MBM) to tackle aviation’s carbon emissions can be reached at the International Civil Aviation Organization (ICAO) Assembly this week and next in Montreal.
“If everybody is pragmatic, an agreement is possible; there is political will everywhere to have some kind of agreement,” says IATA Director General and CEO Tony Tyler. On the eve of the assembly’s opening, he stressed that the industry would much prefer to have a single carbon-offsetting scheme in place by 2020, the details of which would have to be worked out in the next seven years.
IATA believes it is “problematic” for regional schemes to form a bridge between the status quo and a new scheme taking effect in 2020, and hopes that “Europe is pragmatic” about what to realistically expect from the ICAO meeting.
Tyler indicates that he does not expect the details of a global scheme and maybe not even much more than guiding principles to come out of this assembly. In that case, the ICAO Council could receive a mandate to hammer out the structure in the coming years and submit it for approval at the next assembly in 2016, four years ahead of the proposed 2020 start date.
Tyler warns that industry and governments will be back were they were a year ago—on the brink of a trade war—should no deal be reached.
The negotiations about carbon-offsetting schemes are taking place against the backdrop of a slightly revised economic outlook for the industry. IATA predicts its members will make a combined $11.7 billion profit for 2013. That is $1 billion less than forecast at its last guidance briefing in June.
There are two reasons for the revision: emerging markets in Asia continue to perform worse than predicted, and demand for air cargo services—which slumped during the worldwide recession—has not picked up yet.
For 2014, IATA now expects airlines globally to make a $16.4 billion profit, a significant improvement over 2013. That would be equivalent to a $5 profit per passenger.